Amazing opportunity... but now what!

Discussion in 'Accounting and Tax' started by ajago5, 25th Jun, 2013.

  1. ajago5

    ajago5 Member

    Joined:
    4th Jul, 2011
    Messages:
    9
    Location:
    Melbourne, Victoria
    Hi guys,

    I've been lurking in the background of this forum for a while now and thanks to many of the resources on here I was ready to enter into the real estate market last year.

    I had saved up a $85,000 deposit, finished my studies, had a salary and a strategy in place (buy IP with a view for CG and then later turn into +CF)

    Then a great opportunity came along for me to move to Dubai and work in my field (property and construction) so I took it. Without trying to sound ungrateful, with the opportunity also came a major change in the way I started to think about my goals and obviously my strategy had to change..

    Part of my role requires me to travel around to different countries quite a bit which was costing me a lot in international exchange fees with my bank account so this led me to look into offshore bank accounts. I then combined some of this research in with my goals to continue to invest in Australian RE and I read a lot of information about trusts structures and offshore banking used by expats to take full advantage of taxation laws but it is still quite unclear to me. Apparently there are some big investors out there who are exempt or at least heavily discounted from income and capital gains tax using such strategies, this combined with a residency in a country that is tax free.. there must be a way to take full advantage of my situation (not to mention the Aus dollar movements at the moment)

    I know what your thinking, I haven't really asked a question, well it is quite complicated and I don't want to bore you with a page long thread but basically is there anyone out there who has had experience with offshore accounts, expat investment in country of birth all combined with some sort of trust structure? and if so what are your thoughts on it? how does it work? and ultimately what is the best way to go about setting up such a thing?

    Oh and how are these people out there doing it because apparently its been proven that they are ..legally of course.

    Any comment would be much appreciated as you can imagine I am overwhelmed a bit by this new situation, after sorting everything out back home its like I have to start over again.

    Thanks in advance,

    AJ

    P.S. Don't worry I will definitely be Skypeing my accountant about this as well.

    P.P.S Any comments on real estate in Dubai would be interesting as well (2020 is approaching which will have a huge impact)
     
  2. Terry_w

    Terry_w Member

    Joined:
    19th Mar, 2012
    Messages:
    9,610
    Location:
    Sydney, NSW
    Become a non resident for Australia and invest overseas where it is not taxed here. Choose a country with a low tax rate and make sure it won't be taxed in your country of residence either.
     
  3. MRO

    MRO Member

    Joined:
    24th Apr, 2013
    Messages:
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    Location:
    Perth Hills
    Do what Terry said ^^.

    As a general rule, assets you hold in Australia will be taxed on any profit they generate in Australia. As a non resident the tax rates are less favourable. This is very hard/impossible to avoid regardless of structure.
     
  4. ajago5

    ajago5 Member

    Joined:
    4th Jul, 2011
    Messages:
    9
    Location:
    Melbourne, Victoria
    Thank you for your reply Terry and MRO, much appreciated.

    I guess now I have to weigh up the benefit of reducing my tax vs the disadvantages of investing in a foreign country.

    Would either of you know approximately what the tax component (% of purchase price perhaps) of an investment property in total including all associated cost less deductions would be in AUS?

    I know its very dependant on a lot of variables but say its a negatively geared residential IP with a 20% deposit, with fixtures/property depreciating at an average rate, what would you say is the yearly tax component?

    Also if anyone has any experience with the UAE (Dubai in particular) real estate market I would love to hear your thoughts?? It seems to be very inconclusive but one things for sure they are seriously on the move again over here.

    Thanks again for your help

    AJ
     
  5. Gerg

    Gerg Member

    Joined:
    14th Oct, 2012
    Messages:
    5
    Location:
    Adelaide
    AJ,

    I'm not sure I have very specific answer to your questions, but here you go. I have lived in Dubai for past 10 years, and have one investment property in Aus for past 7 years.

    I've also been planning another investment property, or investigating some kind of offshore solution of what to invest in. But my situation is slightly different since we are expecting to return to Australia to live in near future.

    I would not invest in Dubai propertly unless you have a high risk appetite. Even after the 50% fall in prices I still think it is over valued for what you get. I rent, and have no regrets in investing in Aus propertly where the market and country are relatively stable, especially for first propertly. If I already had a portfolio of properties when I moved here it would have been different matter.
    On the upside in dubai is the possible world expo bid, and if they win, then maybe there is good upside potential. On downside if GFC2 comes, expect another big dip, or if there is general middle east instability etc........ who knows what can happen.

    Be very careful with getting financial advice from firms in UAE. It is un-regulated market and a lot of bad advice is getting around.

    If you are planning to be Aus non-resident for tax purposes , maybe there is benifit in offshore banking and investments as the earnings should be tax free. But in my case, as I am planning to return to Aus soon, there is no benifit as worldwide earnings are taxed when I am a Aus resident.
    For most investors, I am not sure there is much benifit in off-shore banking / investing / tax structures etc.

    I am not an advisor and this is all just my opinion based on my own internet research and experiences so take it as such :)